Correlation Between Elite Pharma and Amarin PLC
Can any of the company-specific risk be diversified away by investing in both Elite Pharma and Amarin PLC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Elite Pharma and Amarin PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elite Pharma and Amarin PLC, you can compare the effects of market volatilities on Elite Pharma and Amarin PLC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Elite Pharma with a short position of Amarin PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elite Pharma and Amarin PLC.
Diversification Opportunities for Elite Pharma and Amarin PLC
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Elite and Amarin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Elite Pharma and Amarin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarin PLC and Elite Pharma is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Elite Pharma are associated (or correlated) with Amarin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarin PLC has no effect on the direction of Elite Pharma i.e., Elite Pharma and Amarin PLC go up and down completely randomly.
Pair Corralation between Elite Pharma and Amarin PLC
Given the investment horizon of 90 days Elite Pharma is expected to generate 1.86 times more return on investment than Amarin PLC. However, Elite Pharma is 1.86 times more volatile than Amarin PLC. It trades about 0.13 of its potential returns per unit of risk. Amarin PLC is currently generating about -0.02 per unit of risk. If you would invest 3.00 in Elite Pharma on December 29, 2023 and sell it today you would earn a total of 11.00 from holding Elite Pharma or generate 366.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 75.0% |
Values | Daily Returns |
Elite Pharma vs. Amarin PLC
Performance |
Timeline |
Elite Pharma |
Risk-Adjusted Performance
0 of 100
Low | High |
Very Weak
Amarin PLC |
Elite Pharma and Amarin PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Elite Pharma and Amarin PLC
The main advantage of trading using opposite Elite Pharma and Amarin PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elite Pharma position performs unexpectedly, Amarin PLC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amarin PLC will offset losses from the drop in Amarin PLC's long position.Elite Pharma vs. Flexible Solutions International | Elite Pharma vs. Bridgford Foods | Elite Pharma vs. Albertsons Companies | Elite Pharma vs. NH Foods |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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